If i were to move all of my money to offshore accounts in the carribean,?

Question

then would i not have to pay taxes on it?
is that illegal?

Answer 1

If it's money that you have already received previously, then you've been taxed on it so your income has already been reported to the IRS. But if you are going to use it to try and shelter future income, then yes what you would be doing would be illegal. The IRS is cracking down on off-shore accounts to try and hide income. I've included some articles about the pitfalls of having off-shore accounts. Plus, if you have a foreign account you are supposed to fill out a form annually (form TD F 90-22.1) and file it by June 30th. If you don't you can be fined.

Answer 2

You'd pay income tax when you recieved the income, so moving it offshore after you earn it won't save you a dime in US taxes. If you earn interest on the money in the offshore account, that interest is fully taxable by the US whether or not it is taxed by the country where you deposit the funds.

If the IRS suspects that you are harboring funds in an offshore account to avoid taxes, they'll just estimate the income from the accounts and assess the tax based upon that estimate. You can safely assume that their estimate will be on the high side of unreasonable. It will then be up to you to prove the correct amounts.

Answer 3

You need to pay tax on any money that you make if you made the money in the US working, however just simply moving your money from one bank to another isn't illegal. Only if you take cash from someone you work for and don't pay tax and just put it right into the bank.

Answer 4

Under US tax law, the location of the money makes absolutely no difference. The location YOU were in when you earned it MAY allow certain credits or exclusions, but it is still subject to US tax law.